- 1). Develop a personal budget with a goal set for basics, gifts and luxury expenditures. Make your budget known to your family by telling your spouse and kids that you must cut back to save up for big goals that include college and weddings so the kids do not get upset about your family being in debt. The family meeting can help get everyone on the right track towards keeping a budget and working toward savings.
- 2). Come up with a long-term plan that includes paying for health insurance. Cutting back on groceries by cutting coupons or using the Women Infant and Children (WIC) program can help free up some money for insurance. A new medical bill can easily sink your efforts to eliminate debt so take a preemptive measure and take out a superb insurance plan.
- 3). Calculate how much you need to put on your debt each month. Online debt reduction planners can be helpful for this because they look at your interest rate, balance and minimum payment and what you need to do to get the debt paid off.
- 4). Put money towards savings that your family can live on for three months in case of emergency. Although this might sound hard to do in addition to paying bills and taking care of basics, this is critical to your debt management plan. Without savings, your family could easily end up having to charge basics and later file bankruptcy if someone loses a job.
- 5). Consider using the snowball method that Dave Ramsey recommends. This means that you pay the minimum on all cards except your smallest debt, which you try to pay off quickly with large payments. You continue this method with the next smallest debt and the next smallest after that.
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